We know that Sears plans to do nothing and hopes something good happens. Fat chance.

J.C. Penney has decided to bet the house. They aren’t betting on the status quo but rather the most radical changeover in recent retail history.

Penney has a new CEO — Ron Johnson. Mr. Johnson is the former Apple executive who ran the incredibly successful chain of Apple stores. Before that, he worked at Target in various marketing jobs.
When Mr. Johnson came to Penney and studied its marketing he was “underwhelmed.” The stores were “tired.” Attempts to attract younger buyers (Mary Kate and Ashley Olsen teen clothing line didn’t do the job, apparently) fell flat. Penney ran 600 promotions a year; each promotion cost about $2 million. Regular prices meant nothing as more than 60 percent of all customer purchases were off price. And that cycle of constant promotions demands bigger and bigger discounts. Johnson said, “Once you start to promote, the only way to beat a promotion was to make it bigger. This didn’t feel like an appropriate strategy for a department store.”
Six months after joining the board of directors of Penney, Johnson unveiled his strategy. Gutsy? Absolutely. Crazy? Maybe.

They will have 12 promotions (one a month) instead of 600. No more coupons, no more multiple markdowns. Everyday low pricing. Month long value prices, such as back-to-school in August. One markdown to get rid of clearance items. Penney will offer major markdowns on certain items on the first and third Friday of each month.
New name — JCP. No more 99 cents. Flat pricing — $10, not $9.99.

All stores are being revamped; a totally revamped store. Brighter colors, more top brand names. They will open 100 unique specialty stores within the store. For example, Martha Stewart’s shop will open early next year. All these mini stores — think Target but with five times the number of cool little shops.
Impressive, right? From top to bottom, the new JCP will be up to date and treat the customer with respect and simplify everything — pricing, promotion, etc. They decided to use Ellen DeGeneres to tell their new story of fair and square pricing.

It will take two years to implement all these changes and get 100 shops in all their stores. So they started with their pricing strategy (reduced regular price as much as 40 percent for all their products) and implemented their new promotional strategy (12 a year).
Their campaign launched on Feb. 1, 2012. So far it is a total disaster. Revenue has dropped 20 percent over last year same time and customer traffic fell by 10 percent. Last year, the company made $64 million; this year they lost $163 million.

There was a headline on MSN about JCP. “Fair and Square pricing? — That will never work, JCP. We like being shafted!”
It’s not easy to try to tell, inform and then convince 30 million people (number of different JCP shoppers) that your marketing for the last 100 years is wrong and unfair. Sadly, you are telling them that you had been unfair to them but now you were cleaning up your act.

There are all sorts of marketing swamis weighing in on why the customers have been turned off by JCP pricing/promotion strategy. Unfortunately, JCP might not get a chance to show off their cool 100 mini shops. If they go back to their old ways, they will do it without Mr. Johnson.
I, for one, don’t fault JCP for taking such radical steps. I’m not sure either JCP or Sears can be saved from themselves, but at least JCP is trying to reposition the company in a place that will give them a chance to continue for another 100 years.